Dave Ramsey ELP

[Newby]

xrac,
What part of Ramsey's advice do you find incorrect, except the fact that you believe WL is more the answer than term. I work with many physicians and the vast majority would be much better off if they did follow his advice.

I'll answer that:
1. That debit cards are better than credit cards and cash is better then either- wrong! Paying everything by credit card and paying off monthly is definitely the best.

2. That his paid local providers can select mutual funds that return an average of 12% annually- Dave WAY oversells this...even his local endorsed provider told me that.

3. That you always need a realtor when selling a house...especially one of Dave's endorsed local (paid) providers. Wrong! You need a real estate attorney at the closing looking out for you.

4. That Bee Alive Royal Jelly does any of the stuff Dave says it does...Bullshit!

5. That you should never have a business loan. Wrong! Many people have been VERY sucessful in business and would never have got there without a business loan.

6. That you shouldn't have a mortgage- Yes, I've listened to Dave long enough that I remember when he said he wouldn't even borrow money to buy a house. He STILL says that he personally would NEVER buy a house unless he could pay cash for it.

7. Buy term and invest the rest for everyone. Wrong! Depends on the need. Great advice if you KNOW you will be wealthy at the end of the term but that isn't always the case. And some people can't get term now due to health conditions.

that was seven...just listen to his show and you will discover many more.

 

[SportsNut]

6. That you shouldn't have a mortgage- Yes, I've listened to Dave long enough that I remember when he said he wouldn't even borrow money to buy a house. He STILL says that he personally would NEVER buy a house unless he could pay cash for it.

I agree... Never have a mtg to buy a house...

Caveat: As long as you have enough cash to buy the house that you want to live in... Of course not many ppl do, consequently the rest of us take mtgs to buy that house.

Duh Dave... not very realistic in this day and age.

 

[djs]

6. That you shouldn't have a mortgage- Yes, I've listened to Dave long enough that I remember when he said he wouldn't even borrow money to buy a house. He STILL says that he personally would NEVER buy a house unless he could pay cash for it.

I agree... Never have a mtg to buy a house...

Caveat: As long as you have enough cash to buy the house that you want to live in... Of course not many ppl do, consequently the rest of us take mtgs to buy that house.

Duh Dave... not very realistic in this day and age.

Actually, if he says you can earn 12% in a mutual fund, and the home mortgage is somewhere under 7% (and tax deductible), why wouldn't you have a mortgage and invest the cash? You're making at least 5% more money, more when you consider the tax benefits of the mortgage.

People do need to think more before going so far into debt though.

Dan

 

[Newby]

6. That you shouldn't have a mortgage- Yes, I've listened to Dave long enough that I remember when he said he wouldn't even borrow money to buy a house. He STILL says that he personally would NEVER buy a house unless he could pay cash for it.




Actually, if he says you can earn 12% in a mutual fund, and the home mortgage is somewhere under 7% (and tax deductible), why wouldn't you have a mortgage and invest the cash? You're making at least 5% more money, more when you consider the tax benefits of the mortgage.

People do need to think more before going so far into debt though.

Dan

Dave gets asked that exact question very often on his radio show. He plays both sides of the fence on that. When he's pitching Mutual Funds (through his network of providers) he strongly says they will get an average return of 12% BUT when someone calls in with the question of why they should pay their 6% mortgage off early instead of investing it in the mutual funds he says "debt is dumb!" You're peace of mind is worth more than that and you'll go broke trying to do it any other way.

When people call Dave's show and give examples of how they have been successful doing the oposite of what Dave tells them to do he hits lets them speak for a short time and then he always replys with the "feel, felt, found storytelling method" while muting them so they can't speak again. Their silence makes it appear that they are agreeing with him.

For anyone who doesn't know what feel, felt, found is... it's a very old school way of handling objections (acknowleging the objection, identifying with it, and showing how you can solve their problem) and is quite useful to get your point across in some situations. Dave is a MASTER at it.

I understand how you feel blah blah blah, I even felt that way myself blah blah blah, but what I found out is blah blah blah...

 

[xrac]

Let's see if I have no mortgage (1)I have no interest to deduct on my income tax return, (2)here in Indiana I lose the mortgage exemption on my home so I pay more in property taxes, (3)my savings are tied up in a non-liquid asset, and (4)in the current market that asset is actually declining in value. If a person is sophisticated enough in their strategy and properly understands risk there are other options that can make a lot of sense.

For example I used the equity in my home to secure a line of credit that gave me the ability to start a business and securing bonding capacity. That was 15 years ago. The second year of my business I netted in excess of $100,000 when I had never before made more than $40,000. I would have never done any of it if I had followed Dave Ramsey's advice.

 

[somarco]

The mortgage interest write off is mostly over-blown. With mortgages at 7% or less and tax rates at an all time low (at least for now . . .) you really don't get that much of a benefit.

That being said, Dave is like a reformed smoker when it comes to debt. He made a lot of money when he was very young (mid 20's) on highly leveraged real estate deals. The real estate market started to collapse and he lost everything.

His advice is fine . . . up to a point . . . but not very practical.

I agree that paying off the least expensive loan you will ever have and tying up hundreds of thousands of dollars in an illiquid "asset" is foolish.

 

[moonlightandmargaritas]

Dave is in it to make money. For Dave.

 

[LGilmore]

"Dave is in it to make money. For Dave."

yup....

 

[xrac]

"Dave is in it to make money. For Dave."

yup....

Amen and he takes advanatge of the Churches to do it!

 

[Marker77]

My wife and I are going through Financial Peace University at our church. Even though I knew most of the material, it was good to hear again and we actually started to implement a few of Dave's recommendations. I agree that he is in the business to promote himself and company but after going through half of his course, his ideas are needed for a lot of families. Let's face it, most families don't budget, are in debt up to their eyeballs, have no real concrete plan to reach financial independance, and are listening to their brother or cousin who is digging their own financial grave for advice.

I don't agree with all of his ideas but the basics are common sense and anyone that follows them will have good results.

As far as being an ELP, I actually applied twice but never heard from them. I spoke to our church about life and health insurance and have written 3 nice cases so far. In a sense, I became my own ELP for my church without the fee.